LGiU long read – Devolution: A state of the nation assessment

For all the focus on Europe, it could be devolution that is the critical constitutional change of our era. Andrew Walker looks in depth at the prospects for radical change in local government.

The UK is incredibly centralised. Tax set locally is equivalent to 1.7% of GDP, out of step with the rest of Western Europe and most comparable OECD countries. At the same time English local government is remarkably constrained in its freedom to make meaningful and strategic decisions in the interests of the people it serves.

This may all be about to change.

In its desire to achieve balanced economic growth the government is about to reform the relationship between the centre and the local, enacting radical change in the structure and function of local government. Councils are to become financially independent with the power to keep and vary business rates, as well as other local taxes, all in a bid to make local government a mechanism that drives growth.

It may open up huge opportunities for better public services and strengthened local democracy. It may enable groups of councils to work together to fund infrastructure and support business in the local area. It may also provide the necessary scale that is needed to address housing supply.

Big challenges stand between here and a devolved local government future, however. Further deals were announced in the Chancellor’s budget on March 16th, as well as extra powers for those already confirmed. Yet big uncertainties remain. Will it lead to meaningful change at the local level, and a different relationship between the citizen and the state? Or will it be another instance of central government using councils as a tool to implement their programme of financial reform?

How did we get here?

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Neither the process, nor the Act, has dealt adequately with issues such as democracy, representation, and civic identity.

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National governments’ policy goals often play out in the arena of local government. Historically, the changes that are imposed on councils are the product of the wider political programmes that parties adopt when they come in to power.

The Thatcher and Major government’s, as well as Labour under Blair and Brown, saw councils as in need of an overhaul. Neither party trusted them to deliver efficiently or effectively, and their reform programmes left a legacy of weakened and fragmented local government.

Fiscal restraint had become a mainstream political issue through the 1970s. Tony Crossland’s “The Party’s Over” speech raised the prospect of a change in council spending levels. Thatcher’s election in 1979 signalled the start of a bitter contest over local finance, which ultimately ended with Whitehall taking control over local spending. After 1997 Labour continued to by-pass elected leaders in an effort to modernise and find “best value”. The attempt at democratic renewal stalled, through schemes like the Regional Assemblies, as there was little attempt to root them in the places that people understood and within the territories that mattered to them.

Now, though, against a background of radical financial reform, local government appears to be getting some of its powers and freedoms back.

Councils have been hit hard by the perilous state of public finances since the economic crash. There is a yawning gap between the resources required to run services and those available, especially in areas like adult social care. Meanwhile there is the long-standing imbalance between prosperous and less-prosperous parts of the country, particularly between the South East and the North.

Over the past fifty years, governments of different stripes have sought to construct geographical “enabling frameworks” in order to promote development throughout England. City-regions are the most recent iteration and the government leapt on them as a model for reforming and innovating at scale. Perhaps their greatest champion of cities is Lord Heseltine, whose 2012 paper No Stone Unturned: In pursuit of local growth made the case for streamlined city governance and greater local control over economic development.

It soon became apparent that this would be the focus for a Conservative government and the first wave of city-deals came in 2012, followed by a second wave in 2013-14.

The Deals and the Act

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Reform, but at some distance…

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What has emerged since Heseltine’s paper is an interesting deal-based style of policy making. Rather than rushing to put together a national framework for devolution, government has taken the unusual approach of opening up the bidding, allowing councils to submit proposals for how their area might use devolved powers.

This is a particularly unusual approach to policy making, certainly in recent British history. It fits with a Burkean tradition of constitutional change, which is characteristically flexible and messy, handling reform “at some distance” rather than managing it too directly. Minsters initially appeared to be happy to allow time for ideas and models to emerge through the deal-making process, yet now it seems they may not be so flexible.

What’s actually going on is simultaneously both a bottom-up and a top-down approach. The government knows what it likes and it knows what it doesn’t. As the negotiation process has extended beyond cities to counties and non-metropolitan areas there are some very clear ideas in Westminster about what these deals should entail. They must be business oriented, with a prominent role for Local Enterprise Partnerships, and there is an enthusiasm for mayors, which seems to be getting stronger with time.

Osborne’s statement on this last point was contradictory, but instructive: ‘I will not impose this model on anyone. But nor will I settle for less.’ It has become apparent is that certain powers will only be granted to areas with an elected mayor, while those without will have to settle for less, the ability to raise business rates to fund infrastructure being one such example.

And now the Cities and Local Government Devolution Act has established a legal framework for devolution. Amendments, written in to the Act late in its passage through Parliament, give wide scope for the Secretary of State to make governance changes to local authorities, including to the constitution and members, as well as the structure, electoral and boundary arrangements.

Concerns with the Process

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“It would have helped to know what was on the table before the negotiation started”

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The first devolution deal was struck with the Greater Manchester Combined Authority in November 2014, followed by deals with Sheffield and West Yorkshire before the 2015 election, and Cornwall, the North East, Tees Valley, West Midlands and Liverpool City Region after the election.

Some clear patterns have already emerged. Most deals state that there is no intention to take powers away from individual local authorities without agreement, and that any transfer upwards of powers must also be consented to. We are seeing similar scrutiny arrangements emerge and similar top-line plans involving transport and infrastructure, apprenticeships and skills, housing, planning and strategic use of land.

LGiU held a roundtable workshop in February to investigate the experiences and concerns of those engaged in the process within local government.

The Mayoral model has been a serious sticking point for many, particularly in county areas. This may be partly an issue of language (some areas appear to be advancing plans to have a “Sheriff”, “Governor”, or “Commissioner”) but it does also highlight the apparent gap between what government says and what it does. Most of those involved in negotiations are starting to realise the strength of the government’s commitment to the mayoral model and the increased offer that is open to those who adopt one.

As the policy has been driven by individual deals, there is an inherent level of secrecy involved, which has troubled some. Engagement, accountability and scrutiny were all raised as significant issues in our discussion. Local government is already so complex that many people feel shut out, and we have yet to see how this might be addressed.

One of the key concerns, especially in councils with a less prominent role in the negotiations with government, is that the programme represents restructuring by another name. Others felt that there is a lack of clarity about what is actually on offer. One attendee commented that: “it would have helped to know what was on the table before the negotiation started.”

A certain divide and rule style has emerged from the deal making, disrupting councils’ capacity or willingness to collaborate across the sector. Certain groups of councils have emerged as favourable in the government’s frame of reference. The pace of change has been quite rapid, and outside of the initial city-deals the timeline has moved from vague, light touch and headline framing, towards something approaching clarity.

However there was also praise for the fact that the government has started the ball rolling. An attendee said that “the agenda needed stimulating and it has brought us closer at the local level.” This has combined with a certain level of pragmatism, apparent in our discussion as well as throughout local government. Many of the councils involved in negotiations see them as a stepping-stone to further discussions about greater devolution in the future.

Meanwhile, the process is exacerbating a number of significant cleavages across the political landscape. These are apparent between central and local government, between different tiers of local government, and within the main parties.

Some feel that the government may be setting councils up for a fall, giving them powers and responsibilities without the capacity and resources. There is widespread worry that they may turn around in the future with a “look, we knew you couldn’t do it”, and revert to type.

A further worry is that mayors and local MPs may find themselves in conflict, with overlapping remits. There are already reports of MPs making their presence felt in negotiations, which have not helped to ease tensions.

There is strife in the Conservative Party too. Leaders of Conservative-run non-metropolitan areas, particularly the big counties, expressed concern from the beginning that their party was giving away prizes to Labour cities and leaving them out of the picture. The problem was exacerbated after the latest financial settlement left the counties out of pocket.

One attendee at our roundtable acknowledged this point and called for pragmatism: “People are playing politics. We need to distinguish between political boundary issues and real issues.”

What next?

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It is likely that at some point we will reach a tipping point whereby devolution becomes de facto national policy

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So where does that leave us?

Over the past eighteen months we have seen impressive momentum from the government to get the ball rolling on devolution. Where previous governments have talked about empowerment, regionalism, localism, or rebalancing, this one has put in place a series of high-profile deals and a legal framework to transfer significant powers from central to local government.

In the budget, deals were announced with Greater Lincolnshire, East Anglia, and West of England, extending devolution to rural areas and counties. It was notable that many of the other deals on the cards were not announced, however. Negotiations in Essex, Hampshire, North Midlands and elsewhere did not make it into the package, although they looked likely just a short time ago.

Furthermore, there is still a lot of fundamental detail to be hammered out regarding the deals that were announced. Cambridge City Council, for example, has rejected the Eastern Powerhouse deal, and Leeds City Region’s position is as yet undetermined. How areas will move ahead without those key cities has not been made clear.

Two overarching uncertainties make it difficult to predict how devolution will pan out in the future.

Firstly, the deal-based and evolving nature of the policy means that the goal posts are shifting regularly. In practice devolution is a process, not a single event. The Act provides a framework but we are yet to see what will actually be made of it.

Secondly, there is still a big question mark over how this will work in non-metropolitan areas. The driving force behind devolution was always growth in cities. The opportunity was arguably extended to county and rural areas due to political pressure and we may see a model crystalise fairly soon to enable the government to deal with this smoothly.

There may be big unintended consequences, as often happens when one arm of the state is used as a tool to ram home the policy goals of another. How much consideration has really been given to the disparities that might be exacerbated between successful and unsuccessful areas, let alone the prospect of some places falling by the wayside entirely. Is there a long-term plan to allow some parts of the country to “fail”, as with the likes of Detroit in the USA, when the RSG is removed in 2020?

Neither the process, nor the Act, has dealt adequately with issues such as democracy, representation, and civic identity. The deal process in particular has been closed to the wishes of local citizens, and even council leaders have been the weaker party in negotiations. County Durham is the only authority so far to hold a ballot on their proposal. Citizens had the chance to approve the bid in a poll carried out in February. On the whole it has been subject to ministerial will, perhaps even to the will of other unelected figures close to the government.

At some point in the near future it is likely that we will reach a tipping point whereby the deal-based approach falls away and devolution becomes de facto national policy, with a framework drawn up and put in place across the country. Government has resisted this so far, though some will be happy with a move towards consistency. It certainly puts pressure on the councils to think strategically and pragmatically in order to make the best of the situation.

The Act has secured even greater power for central government in some ways. When a core group of successful combined authorities emerge with a workable model, we may soon see the Secretary of State using the powers, granted through the amendments to the Act, which enable him to step in, redraw boundaries and define governance arrangements.

There will be a further challenge in clearly defining where power and responsibility lie. Mayors will be accountable upwards to the government and downwards to citizens and stakeholders. The new elected mayor in Greater Manchester, for example, will report to the scrutiny committee of the Greater Manchester Combined Authority, drawn from the “Scrutiny Pool” of 30 councillors from the ten authorities.

If local government is to take on new responsibilities, new structures, and new forms of partnership then there will need to be a “multi-level model” of accountability that encapsulates this, clarifying the roles and responsibilities within the new ecosystem. Most of the deals announced so far involve some form of cabinet made up of the partner authorities, with a two-thirds in favour vote required for major change.

Despite these arrangements we may start to see that soft power is more decisive than some have considered. Informal brokerage, leadership and negotiation could be key to combining health and social care, for example, though the mayor will have no formal responsibility in that area.

And of course this may also come up against the claims to local sovereignty contested with MPs

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In The Blunders of Our Governments, Anthony King and Ivor Crewe warn against “operational disconnect” in public policy. “The easy bit,” they argue, “is deciding what ought to be done: the hard bit is the doing of it, and the hard bit is likely to be very hard.”[1]

As with previous governments, local government is the arena in which a broader political programme is to be enacted. Whether in practice this is a radical change for the better or just tinkering around the edges we will begin to find out soon. It is certainly incumbent on councils to grasp the nettle by facing up to the offer pragmatically and positively.

The government has decided what is to be done, now local government will begin the doing of it.

Andrew Walker is an LGiU researcher and PhD candidate at Queen Mary, University of London. This article is part of his ESRC funded research, undertaken in partnership between LGiU and The Mile End Institute at QMUL.